Yesterday I had an encouraging 1 hour conversation with a representative at Silicon Valley Bank. Unfortunately I was told today that Silicon Valley Bank cannot open an account for any bitcoin business or merchant. Below is the word-for-word email response from SVB.
I’m not sure how we’re suppose to work together in the future without a bank account, but that’s the situation. I thought SVB was a bank that supports innovation and startups, even bitcoin startups. Apparently not! They support innovation, but not Bitcoin– quite possibly the greatest innovation of our time. That’s a shame!
Perhaps it’s not their fault, as SVB seems to put blame on U.S. regulation. Western Union also took a hit today after their earnings report projected increased costs from regulatory pressures. It’s also possible banks now view bitcoin as more of a threat given it’s resiliency and the many advantages it offers over traditional banking and fiat currencies like the dollar.
I suspect SVB along with other U.S. banks and government regulators are over-reacting to Bitcoin and fighting it will do them no good. However, this does highlight the challenges that many legitimate bitcoin business and bitcoin merchants must deal with currently.
Bitcoin is truly a better form of money in every way, but U.S. banks and government regulators shunning bitcoin business stifles innovation. It’s a position both will eventually regret. How many U.S. bitcoin business will now move to other countries, or at least bank there? This is yet another way the U.S. drives innovation outside its borders and as an American this is a sad thing to witness.
Are we in the fighting phase now?
“First they ignore you, then they laugh at you, then they fight you, then you win.”
– Mahatma Gandhi
As some of you may recognize, the quote above was cited by the Winklevoss twins in their keynote address at the San Jose Bitcoin conference earlier this year. I believe this quote rings true now more than ever given my recent experience in trying to establish a bank account. I think we may be in the fighting phase of bitcoin adoption and acceptance… at least in the United States!
Even though Bitcorati is a purely information/content based company (with no involvement in money transmission or money services), we are unable to establish a bank account on the grounds that we accept bitcoins as payment. Initially (while our conversion necessity is high), we will need to convert a majority of our bitcoins in to dollars. Over time there would less of a need to convert and thus less of a need for traditional banking. Perhaps this is another reason why the banks don’t like bitcoin or bitcoin businesses.
If you’re a bitcoin business or merchant that accepts bitcoin please share your story in the comments below. Who do you currently bank with and what has been your experienced?